Rail shipments of lumber on the increase

Union Pacific Corp. is pulling rail cars from storage for the first time in four years to haul lumber for home builders, according to a Bloomberg report.

The Association of American Railroads (AAR) reported that North American rail carloads of lumber and wood products have risen 10% through the end of July when compared with the same period in 2011.

In its latest weekly rail traffic report, dated Aug. 16, the AAR reported that 10 of the 20 carload commodity groups posted increases compared with the same week in 2011, with lumber and wood products up 19.8%, outpaced only by petroleum products at a 44.4% increase.

Warren Buffet’s Burlington Northern Santa Fe hauled 10.7% more lumber and wood products in the first half of this year than a year earlier, according to Bloomberg. The housing-market trend that’s boosted Norfolk Southern Corp. (NSC)’s lumber business by 6% is “encouraging,” Donald Seale, chief marketing officer of the Norfolk, Va., company, said in a July 24 conference call with analysts. Clarence Gooden, CSX executive VP sales and marketing, projected a “continued recovery” in building materials on a July 18 earnings call, Bloomberg reported.

Economists speculate that builders may be stockpiling lumber, given the volumes shipped versus the number of housing starts. Federal Reserve Bank of Dallas president Richard Fisher told reporters on June 28 that the “numbers would tell you we’d have some 700,000-plus homes built this year.” He observed that the recovery process is a slow one, adding: “I do think the housing market has bottomed out.”